Working Out The PERFECT Facebook Ad Budget

0:00single most common Facebook ads question that I get asked is what should my budget be and to be honest it's kind of an annoying question because without knowing more about the specific circumstances of that individual of that business I can't give an answer maybe the right budget for them is 300 a month maybe it's 300 000 a month but I can show you how you can work out what your budget should be given your specific circumstances that's what I'm going to do in this video so let's start with the traditional way of working out what your budget should be so let's assume that you're an e-commerce business and your

0:31average order value is 80 and let's also assume that you need to hit a 2X row ass in order to break even that's your Breakeven Point soon to generate purchases conversions for forty dollars each okay now we know given what Facebook tells us that we want to be aiming for 50 conversions per week in order to get out of the learning phase if we can get out of the learning phase then our campaigns should perform better so just do a little bit of simple math you need to generate 50 conversions a week each one's going to cost you 40 now of course we're going to hope that each

1:04conversion is going to cost you less than that but we start with a break-even point to make this calculation so we need to generate 50 conversions a week they're going to cost 40 each that works out at a weekly Facebook ad budget of two thousand dollars roughly eight thousand dollars uh per month eight and a half thousand dollars per month to work back to get your daily budget just divide your two thousand by seven which equals roughly 286 dollars I've got pounds in there just because obviously this ad account is based in there based in UK and just on this note I would strongly recommend that you do go with daily budgets over

1:37lifetime budget so I've got another video on that I'll include a link to the description if you want to work out why you should use daily budgets instead of Lifetime budgets okay so that's the traditional way of working out we're going to look at a starting budget of 286 dollars per day eight and a half thousand dollars per month that's your starting point go with that good luck seriously Stone Cold seriously now there'll be lots of people watching this video particularly if you're relatively new on your Facebook ads Journey going I can't afford anywhere near that much and that's absolutely fine this traditional way of working it out is nonsense and

2:09it's nonsense for a few reasons firstly you could absolutely have good results in the learning phase if you see that you're still in the learning phase or you see learning limited alongside your ad sets don't think that your campaigns won't work Facebook tell you that your campaigns will perform better if you spend more and get out of learning phase there is a hint of truth to it but mainly because it benefits Facebook right we just run this calculation and you might come to the conclusion that you need to spend eight and a half thousand dollars per month as a minimum Facebook ad budget you don't that would benefit Facebook

2:41Facebook would love that but you shouldn't start there that's too much for the vast majority of Facebook advertisers so particularly when you're getting started throw out any notion that you need to have a large enough budget to get out of the learning phase in order for your campaigns to perform they can absolutely do well within the learning phase and you need to prove that they can perform well at lower budget levels before you start to scale that is very important otherwise you could end up wasting a lot of money very quickly the beginning stages of Facebook ad campaign are all about testing optimization working out the ad creative

3:14the ad copy um all the sort of various the offer that go into making a Facebook ad campaign successful you need to do with a smaller budget okay so if this is not how you should calculate your starting budget how should you do it and the process of working this out is actually really simple you just need to sort of apply the framework that I'm about to explain I think your starting budget your minimum budget should be an amount that if you lose all of it and you generate no sales no leads Etc that's absolutely fine it is not going to put you or your business in any financial

3:45difficulty I think that's really really important what that is for your business is absolutely going to depend do you have a business that's turning over 100 million a year or you've just gotten started last week and there's no Revenue whatsoever those two visitors are in completely different circumstances and that number of yeah we can afford to lose this and it's not going to cause us you know any any financial difficulty is going to be very very different so that's the first thing right start with an amount that if you don't generate any leads any sales for that first month it's not crippling in any way but I wouldn't start with an amount

4:20that's so small that you wouldn't care about it so for example let's say you've got a successful business let's say it's a seven figure business I'm turning over about a million dollars a year one million dollars if you start a new campaign and you spend ten dollars a day are you really gonna care about the 300 if you lose it probably not it's not enough whereas for a smaller business that might be plenty might be too much even you want to find that sweet spot where you go we can afford to lose this it's not gonna hurt us to put us in any difficulty if we do but emotionally it's

4:52gonna sting a bit I don't want to lose this I want this to come back with a return there's there's other things we could be spending this money on and that's a sweet spot because it's really important that you care I've seen some businesses larger businesses start they they create a Facebook ad campaign they get it running they start with a tiny budget they just doesn't mean anything even if it works it's not gonna affect the number of sales they generate the number of leads they generate because they're already generating a lot elsewhere so you need to find that sweet spot it's not going to hurt us but we

5:21care and that caring is really important because it means you're going to you know either if you're running the campaigns yourself you're going to be in your ad account you're going to be looking at the data you're going to be making adjustments trying to optimize the campaigns trying to test new stuff if it's too small you probably won't be bothered to do all of that and if you're a bigger business you've got someone else doing it for you you then likewise you're gonna be checking up on how they're doing and monitoring the results and you're going to be involved in the process you're going to be willing to

5:46you know if you're working with agency and they say look we need uh you know new video created of whatever you go okay yeah we've got people we can do that and we'll get that over to you and that sort of thing you're going to be willing to take the steps that are required to make you successful in the space okay so spend a bit of time and work out what that number is likely to be for you and that's just a starting point what you want to do is work out that your offer creative Etc can work at that budget level before you then go

6:13ahead and scale you don't need to stay advertising with a budget that's that small you can absolutely scale up to the point where it's very significant but only once you know it can deliver results for you that way you don't risk losing too much money when you're in that testing an optimization phase near the beginning now I'm going to show you exactly how you should scale in a second but before I do just want to quickly mention our Facebook ads done for you services so my company creates manages and optimizes Facebook and Instagram ad campaigns for clients if that's something you're interested in you can find a link in the description below but

6:42click on that you can go through to a page booking a call directly with one of my team members we do have a 3K per month minimum budget requirement so please only give a call if you meet that but if you do go ahead book a call find out more hopefully we get a chance to work together and then as I mentioned once you've got Facebook ad campaigns that are delivering results are delivering a profitable or at least a break-even return on our spend then you can look to scale and in this video here I show you exactly how you should scale your Facebook ad budgets there's a lot

7:08of misinformation around about this people get it wrong all the time they scale too often they scale into larger increments I show you exactly how to do it step by step with examples go ahead and check it out